Annual Report 2023

Procurement and supplier management

Remit and strategic objectives

HHLA Group Procurement is firmly established as a strategic partner within the Group. It is involved in procurement projects at an early stage, providing value-adding support. Purchasing is a shared service provided by the Group's management holding company in Hamburg and deals with procurement activities on behalf of most of its domestic majority holdings. It also supports and advises Group companies as part of its holistic management of product groups, suppliers and contracts so that the service and performance requirements of internal customers are met as fully as possible.

Pioneering solutions are developed for the Group in close partnership with Operations and Engineering. In the process, HHLA draws on strategic and cooperative collaborations with select business partners. The aim is to establish a consolidated supplier base characterised by maximum added value, top quality and optimum life cycle costs. In addition to economic aspects, great importance is attached to sustainable procurement, which begins with the careful selection of suppliers. In the supplier qualification process, suppliers submit a self-disclosure confirming that they fulfil the quality standards of HHLA in the fields of sustainability, compliance, procurement and occupational health and safety.

Product groups and volumes

Procurement volumes

in the HHLA Group in 2023: € 332 million

Purchasing volue (pie chart)

The procurement volume of the HHLA Group amounted to around € 332 million in 2023 (previous year: € 376 million) and was distributed among the above-mentioned groups. Given the high proportion of investment projects in the 2022 and 2023 financial years, the volume was well above the average amount of the previous years.

The portfolio covers a wide spectrum, divided into three main product groups: technical purchasing, construction purchasing, information technology (IT) and indirect purchasing. Technical purchasing deals with the procurement of port handling equipment and energy products and covers material procurement as well as the procurement of services needed to service and maintain terminals and technical components. The construction department is responsible for the product groups of construction above and below ground, railway construction and facility management. In addition to project management services, these areas also include planning and engineering services as well as maintenance and repair services. The main items procured by the IT and indirect purchasing department include software, hardware and telecommunication products, as well as services such as consultancy, marketing and HR services. The department also handles the procurement of office materials and personal protective equipment.

Selection of suppliers and service providers

When selecting partners, great importance is attached to sustainability and compliance, as well as financial stability, quality, reliability and innovative flair. HHLA requires its suppliers and service providers to comply with its Supplier Code of Conduct, which covers aspects of human rights, occupational health and safety, environmental protection and sustainability as well as appropriate conduct in a business environment. Due to the requirements of the German Supply Chain Due Diligence Act, the Supplier Code of Conduct has been supplemented in parts and can be found on the HHLA website. HHLA Supplier Code of Conduct

In 2023, all suppliers were contacted and requested to confirm the current version. Prior to the change, almost 80 % of the procurement volume was placed with suppliers who had pledged to comply with the requirements, or with similar regulations. For the new version, the proportion is currently 80 % of the procurement volume.

Overall, the procurement volume was divided between 1,936 active suppliers during the reporting period. Around 25 % of the volume was placed with suppliers based directly in Hamburg. Approximately 93 % of the procurement volume is attributable to business partners in Germany, although it must be said that, particularly in the case of capital goods and replacement parts in technical purchasing, as well as in IT services, the company often cooperates with suppliers that have sites in Germany but belong to international groups. In 2023, half of the suppliers in technical purchasing with the highest procurement volumes belong to international groups and account for 75 % of total volume. The supplier structure is generally highly dependent on the requirements.

Sustainability standards are also becoming increasingly important – a fact also reflected by the respective legislation. For example, the German Supply Chain Due Diligence Act came into force in 2023. This act governs corporate responsibility for complying with human rights requirements in global supply chains. In order to define and establish effective and appropriate processes, HHLA set up a project with the Sustainability, Purchasing and Compliance departments in 2022. External consultants supported the project, which also included an initial risk analysis. Potential risks were identified for a small number of suppliers and service providers. As a result, defined risk mitigation and avoidance measures were – and continue to be – implemented within the Group. In addition to the confirmation of the updated Supplier Code of Conduct, this also includes verifying recognised risks and the Group-wide launch and implementation of the concept.

An existing element of the supplier and risk management strategy is business partner screening which, for example, makes it possible to regularly check entries in various sanctions lists. Compliance with these criteria is monitored by an IT-based supplier management system. This also facilitates a continual review of the degree of fulfilment and the supplier base.

Operational and strategic areas of focus

In light of the challenging economic situation, demand management and cost management were both major areas of focus in 2023, along with supplier management. Prompted by volume trends, consumer spending and behaviour was carefully analysed and adapted with the aim of adjusting service scope and agreements and ensuring detailed transparency regarding payment obligations. Through close dialogue with the departments, demand was optimised, alternative contract and financing models developed and liquidity-generating measures adopted.

An ongoing challenge is the systematic development of digital processes to optimise the effort devoted to regularly recurring activities and to provide operational and strategic processes with the best possible support. The department is currently developing a digital roadmap for this purpose. The foundation for this transformation process was laid with the launch of the new catalogue system, which has been in operation since 2021 and for which a release upgrade was initiated in 2023 in order to tap further optimisation potential. This has enabled us to consistently increase the automation rate in operational procurement processes over the past few years. In the reporting period, 64.5 % of all purchasing processes were handled fully automatically (previous year: 61.2 %; 2021: 56.5 %). This helps us to streamline processes and ensure compliance with process standards. Furthermore, we laid the groundwork to further digitalise our contract and supplier management, also in the areas of risk management and sustainability.

From a strategic perspective, the topics of supplier management and risk management remain the dominant issues for purchasing. Against the backdrop of the German Supply Chain Due Diligence Act and preparations for the Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive, it will be essential to ensure processes are consistent and well-structured for our top product groups and suppliers in order to keep pace with the growing significance of sustainability and environmental responsibility in the business environment. In this context, the ongoing centralisation of procurement activities and the mapping of Group standards will remain a key topic for the department.

Payments for investments in property, plant and equipment, investment property and intangible assets.
In maritime logistics, a terminal is a facility where freight transported by various modes of transport is handled.
Value added
Production value – intermediate inputs (cost of materials, depreciation and amortisation, and other operating expenses); the value added generated is shared between the HHLA Group’s stakeholders, such as employees, shareholders, lenders and the local community.

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